Controllers Council recently held a webinar on How Finance Can Adapt to Lean Times, sponsored by eFileCabinet.

eFileCabinet is an all-in-one document management software solution that enables businesses to run with more power and efficiency from automation and workflow creation to customizability and control. And you can see some of the things that you can streamline with eFileCabinet organization, findability, collaboration, automation, security, and compliance. Finance teams use eFileCabinet to automate time consuming tasks so they can focus on business outcomes.

Our speaker, Jason Wood, is chief financial officer of eFileCabinet with 10 plus years in software based corporate finance. Jason is passionate about problem-solving with data and dedicated to supporting his various departments in the company through analytics. He believes in the power of data as the key to making smarter business decisions. Jason brings a wealth of experience in corporate finance, including Intuit, HireVue, and in structure.

Following are key takeaways to this discussion. If you are interested in learning more, view the full webinar archive video here.

What are your thoughts on if and when the recession will happen?

When and if a recession happens, I think that in finance, one of the things that we always need to be aware of for our company is who do we sell to? How are we impacted by macroeconomic commission or conditions, from a selling standpoint or a renewal standpoint. Right now, there’s a lot of pressure on industries or companies that are heavily relying on capital markets. If you or your customer base is heavily impacted by interest rate fluctuation or just the post COVID slowdown, you may be experiencing a slowdown right now. I think there’s obviously a lot more variables that come into play, and it looks like that’s going to continue for the near future.

What’s your perspective on post pandemic slowing versus the recession?

The companies that experienced a blow up during that time, it’s hard to sustain that in the current condition. It’s not necessarily something that can continue at the rate that it was at, so you need to be planning for that. As businesses come out of their COVID growth, there’s going to be some slowdown, I’m not going to name names, but there’s several technology companies that recently just a lot of layoffs coming through because of how fast they grew during that time and there’s no longer that kind of growth. And if that growth isn’t there, you may not be able to sustain the expense envelope that you built yourself up to.

It’s about figuring out who are we as a company, who do we serve? How is the economic condition today impacting our customer base and those that we sell to? And what’s realistic for us in terms of growth? And answering those questions right now is super important.

What do you think are some of the components of lean times?

The biggest driver of lean times for a company or an organization is always going to be the top line growth revenue solves all ills.

I think it’s easy a lot of times for us as finance pro professionals to be able to see, here’s the results that are coming in, here’s the trends and here’s what’s happening in the business and the immediate responses to say, well, here’s how much we now must cut. I think it’s easy for businesses to default to that, where the first question really should be is how can we generate more revenue? Is it possible with the situation that we’re in as a company, the situation, the people we sell to, the people that are renewing the situation that they’re in, how can I get more revenue? Because lean times is a result of lower growth than expectation.

If you’re growing to what you’re expected to, you are not having to adjust. The main driver of lean times is really that revenue, that growth is less than some type of expectation.

There’s a lot of people impacted right now with lean times because of the capital markets and where valuations are at for their business. Valuation drivers, whether it’s public or private, are key for your business. It enables you to access capital, so when you’re looking at how to get the best valuation, again, top line has historically always been the main driver.

How can finance leaders adapt to these new recent lean times?

The first thing that I would encourage everybody is to start with revenue. Is it possible for you to acquire more new revenue? If that’s through additional product offerings, through different revenue streams that you haven’t considered before? Is it possible for your business to expand its ability to acquire new business and to be able to renew business that they have if it’s renewable at an acceptable rate? Starting there is always the most productive, but it’s also typically the hardest because it’s most likely stuff that you haven’t done before.

Second, it’s important to understand your business, how you are successful, how you sell, and helping the business find ways to first increase revenue. Is it possible to increase revenue? Once you get through that, then it’s understanding again for the macroeconomic environment that our company is in, considering valuations and the need for capital, the need to be able to borrow money and stuff like that.

Third, you need to ask yourself, “What kind of situation are we in where we can fuel growth?” Because that’s the number one goal is to be able to fuel growth. And once you get through that understanding, then it’s building that expense envelope and what is the acceptable expense envelope.

Remember: adapting to lean times means often communicating difficult things to a business. Most companies, regardless of your industry, you’re planning outside of 12 months, but also, you’ve got three-year plans, five-year plans, and as we’re adapting to lean times, those three- and five-year plans for sure are going to be impacted.

Those plans are going to change. And that can create a lot of work for finance departments. But as you move into lean time, sometimes that model changes and that means that you have to put in the work to be able to change that and adapt your models. Changing your models take a lot of work, manpower, and energy.

To view the complete webcast, download full webinar here.


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